“Share price unlikely to rebound in the short term” ... Kakao price target cut

[The Financial News] LS Securities lowered its price target for Kakao from 55,000 won to 42,000 won on the 15th, while maintaining its “Buy” rating, saying the share price is unlikely to rebound in the short term.
LS Securities analyst Seon Yu-jin noted, “There are concerns about a gap in growth drivers as the integration with external commerce platforms, which was expected to proceed within the year, has been delayed,” adding, “The spin-off has also increased uncertainty about the company’s fair value.”
The analyst added, “The B2C AI services unveiled at a recent event are a positive strategy that could leverage the advantages of a platform with the largest user reach in Korea.” However, the analyst said, “We believe this will be a difficult period in which to overcome macroeconomic headwinds until these services are launched for the general public, deliver positive results, and their actual financial contribution is confirmed.”
Third- and fourth-quarter consolidated revenue and operating profit were forecast at 1.9664 trillion won and 228.1 billion won, respectively.
Analyst Seon said, “With the base effect of the economic recovery in the same period last year weighing on results, demand for business-message advertising is expected to decline in the third and fourth quarters amid a gap in policy support payments, putting Talk Biz revenue at an estimated 606.6 billion won.” The analyst also forecast that “Platform Other will post 538.8 billion won, with growth slowing due to the normalization of securities trading volumes, a decline in summer mobility demand, and the impact of sanctions related to fees charged for cruising sales.”
The analyst also said the content division was estimated to generate 821 billion won, negative growth amid an overall slowdown in the market and reduced activity by major artists.

[email protected] Seo Min-ji Reporter